Govturged to adopt ruling on tariff protection<\/p>\n
JAKARTA (JP): Members of the House of Representatives (DPR)
\nand economic analysts urged the government on Saturday to adopt
\na new ruling that will prevent the permanent implementation
\ntariff protection for upstream industries.<\/p>\n
"I am deeply concerned that our industrialists tend to see
\ntariff protection as a permanent facility for their industrial
\nactivities," a member of the DPR's Budgetary Commission,
\nTadjuddin Noer Said, told The Jakarta Post.<\/p>\n
Citing an example, he said the country's automotive industry
\nhas enjoyed protection for over 20 years.<\/p>\n
"In spite of the long protection, the automotive industry has not
\ngrown strong," he said.<\/p>\n
"I would say that any protection should be limited to, at the
\nmost, five years during initial operation of new industrial plants.
\nOtherwise they will remain impotent and inefficient," he said.<\/p>\n
Tadjuddin criticized the recent proposal of PT Chandra Asri
\nPetrochemical Center, the sponsor of the country's first olefin
\nproject, for the imposition of a duty of between 35 percent and 40
\npercent on imports of olefin products, including ethylene and
\npropylene, for a period of seven to eight years.<\/p>\n
Sri Bintang Pamungkas, another member of the Budgetary
\nCommission, said that he rejected the planned protection tariff
\nproposed by Chandra Asri.<\/p>\n
"You can see that without Chandra Asri, our downstream industries
\ncan survive. I am afraid that the planned protection will make the
\ncompany monopolize the business, with a consequence that the prices
\nof its products will be higher than imports," he told reporters
\nSaturday.<\/p>\n
Senior economist Sumitro Djojohadikusumo said earlier any
\nprotection should be limited at between five and 10 years.<\/p>\n
"There is no reason to protect any industry against imports for
\nmore than 10 years because ten years is enough for an industrial
\nplant to improve its efficiency," he said here on Thursday.<\/p>\n
The long protection time could threaten downstream industries, he
\nwarned.<\/p>\n
Mohammad Arsjad Anwar, a lecturer of the economic faculty of the
\nUniversity of Indonesia, told a one-day seminar on the 1995 outlook
\nof the economic and advertising business on Saturday that tariff
\nprotection should be at a proportional level.<\/p>\n
Considering that our foreign investors, who come from countries
\nwith tariff protection of less than 35 percent, the possible tariff
\nprotection in Indonesia should also be less than that level.<\/p>\n
Arsjad declined to comment on Chandra Asri's proposal on the
\nlevel of tariff rates, but he said the government should reduce
\nexisting tariff rates to as low level as possible in order to make
\nthe downstream industries able to survive amid the rapid decline in
\nthe state's subsidies to the industries.<\/p>\n
Transparency<\/p>\n
Tadjuddin said that there should be a political commitment among
\nthe policy makers on the presence of Chandra Asri in the country.<\/p>\n
"I believe all parties have agreed on the presence of the
\npetrochemical industry. The relevant question is then how to make
\nthe company go ahead without killing our downstream industries,
\nwhich are labor intensive in nature," he said.<\/p>\n
He argued that the current problem of Chandra Asri is not only
\nthe determination of tariff rates. "The problem is also how far the
\ntransparency of the business is made available to the public," he
\nadded.<\/p>\n
He suggested the tariff team disclose the considerations for
\ndetermining certain levels of tariff rates, the timeframe of the
\nprotection, prospects of the business as well as the pricing of
\nproducts.<\/p>\n
"I suggested that the government provide a new ruling on tariff
\nprotection in order to avoid conflicts of interests," he said.
\n(fhp)<\/p>",
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